Permanent Custodians Limited v Geagea

Judgment 1HIS HONOUR: The plaintiff, Permanent Custodians Limited (Permanent Custodians), is a mortgagee of property registered in the name of the first, second and third defendants (Tony Geagea, Charbel Geagea and David Geagea) who are trustees for their parents. Their parents live in the property. The mortgage is in default. The mortgage default was the basis for the proceedings against the first to third defendants. 2The plaintiff also sues the fourth, fifth and sixth defendants who are, respectively, Phillip Symonds, Christopher Swanson and Terence Ledlin, each a solicitor practising in partnership. Mr Symonds was the partner who acted, on the allegations before the Court, for one or more of the first, second or third defendants. The plaintiff sues the fourth to sixth defendants in negligence, breach of warranty of authority and misleading or deceptive conduct. 3The proceedings against the first, second and third defendants have been resolved, under which settlement those defendants agreed to pay Permanent Custodians $300,000.00 plus $130,000.00 for costs. The issue to be determined by the Court is the claim by Permanent Custodians against Mr Symonds (to whom I shall refer, but the liability for his acts extends to the fifth and sixth defendants respectively). 4Permanent Custodians alleges that Mr Symonds represented that he acted on behalf of Tony Geagea, David Geagea and Charbel Geagea, when, in fact, he acted only for Tony Geagea. Further, Permanent Custodians alleges that there has been a breach of warranty of authority and misleading or deceptive conduct by Mr Symonds in representing, on its allegation, that he acted for David and Charbel Geagea, when he did not. 5The negligence claim is based upon the proposition that Mr Symonds was negligent because he (and his partners) owed a duty of care to the plaintiff to take reasonable care to avoid foreseeable loss, which duty was breached to the extent that Mr Symonds represented that any of the first to third defendants was his client, when one or more of them was not. 6Further, those that were not clients did not wish to proceed with the loan agreement, had not signed it, and had not given authority to disburse the monies. As a consequence, Permanent Custodians alleges that Mr Symonds breached his duty of care to it.

Facts 7There is no doubt that the plaintiff has suffered loss as a result of the default on the mortgage over the residence (the "Geagea Property"). There were other mortgages, which, for the purpose of the claim against the fourth to sixth defendants, are irrelevant. The plaintiff's loan to Tony Geagea and/or others, and a corporate entity associated with him, was a business loan for the purpose of the development of property. The loan was supported by a mortgage over a number of properties, one of which was the Geagea Property. 8It is necessary to set out the circumstances surrounding the application for the loan and the development of the project, but only in brief. The basis for the claim against Mr Symonds and the fifth and sixth defendants relates only to whether Mr Symonds was representing David and Charbel Geagea and relates only to the mortgage over the Geagea Property, which mortgage in part supported the loan for the development of the building site. 9It is necessary to go back a little further. In or about February 2000, Charbel Geagea was imprisoned in Lebanon. He was not released until April 2012 and, at all relevant times concerning documents, these proceedings and any cause of action relating thereto, was not in Australia. 10On or about 19 June 2003, Tony Geagea entered into a contract to purchase a property in Clovelly (the Development Property). Shortly thereafter, on or about 23 June 2003, Tony Geagea met with Mr Symonds in relation to the purchase of the Development Property. Tony Geagea instructed Mr Symonds to act for him and an associated corporate entity, Raytoni Development Pty Ltd (Raytoni), which company was yet to be formed but which would have Tony Geagea as a director and shareholder, together with Ms Donna Andari, who would also be an officer and shareholder of Raytoni. Ms Andari was the sister of Ray Andari, who was a principal actor in the development project, but who was not intended to be, and was not, a director or shareholder of Raytoni (notwithstanding its name). 11On 25 June 2003, Mr Symonds wrote to Tony Geagea confirming the import of their conference. The Development Property was to be purchased for $2,930,000.00 and the name of Raytoni (although incorrectly referred to as Rayton in the letter) was to be substituted for the purchaser's name on the contract, with finance to be obtained for close to 100% of the purchase price. There is a reference to the availability of security in Tony Geagea's personal residence, then unencumbered and valued at approximately $1,000,000.00. There was also a reference to instructions to extend the completion date on the purchase of the Development Property for three months after the date then prescribed in the contract. 12On 7 July 2003, Mr Symonds wrote again to Tony Geagea reporting that he had requested the vendor's solicitor to extend completion on the Development Property by 3 months. 13On 17 July 2003, Angela Iskander of Yes Home Loans called Mr Symonds' office. As a consequence of that call, Mr Symonds caused a fax to be sent to Ms Iskander, being the front page of the contract for the purchase of the Development Property. 14On 18 July 2003, David Geagea, the third defendant, turned 18 years of age, and on 21 July 2003, Yes Home Loans lodged an application for a loan and mortgage to Australian Mortgage Securities Ltd (AMS) on behalf of Tony, David and Charbel Geagea. The application for loan was an application to borrow $750,000.00 said to be for the purposes of refinancing an investment property for $250,000.00, plus additional funds to assist in the purchase of the Development Property. The loan application named Mr Symonds as the borrowers' solicitor (i.e. for each and all of them). On the same day as the application is filed and dated, the loan was approved by AMS. The relationship between AMS and Permanent Custodians was such that AMS was approving the loan on behalf of Permanent Custodians. 15The next day, 22 July 2003, AMS instructed solicitors, Galilee & Associates, on behalf of Permanent Custodians, to prepare and serve the loan contract, mortgage and other documents and "to settle the loan, in accordance with the AMS Solicitors' Pack". The instructions to Galilee named the Geagea Property as security property. 16On 25 July 2003, Galilee & Associates sent the relevant documentation to Tony, David and Charbel Geagea at an address in Earlwood, being the address for the borrowers in the instructions from AMS. 17On 12 August 2003, Mr Symonds corresponded with Tony Geagea about the purchase of the Development Property and reminding him of the need to have the loan documents and monies available for the balance of the purchase price well prior to the completion date. 18On 15 August 2003, Mr Symonds wrote to Tony Geagea again regarding the purchase of the Development Property. On the same day, Galilee & Associates sent a reminder to Tony, David and Charbel Geagea at the address in Earlwood asking for a date by which the loan documents would be returned in order to enable settlement to occur. 19On 21 August 2003, Mr Symonds, once more, wrote to Tony Geagea about the purchase of the Development Property. Mr Symonds sent a follow up letter on 27 August 2003, in which he once more urged Tony Geagea to have the loan documents and monies available relating to the balance of the price for purchase well prior to completion, by then fixed for 19 December 2003. 20A further letter was sent by Mr Symonds on 8 September 2003 and, on 12 September 2003, Mr Symonds enquired of Tony Geagea whether he had obtained finance approval. At that stage Mr Symonds had not been informed of any approval. 21On 7 October 2003, Galilee & Associates sent the loan documents, being the loan agreement, mortgage and associated documents, to Mr Symonds. On 9 October 2003, Mr Symonds wrote to Tony Geagea stating that he now had the mortgage documentation for the Geagea Property and asking Tony to arrange for him (i.e. Tony), David and Charbel to attend Mr Symonds' office to sign the documentation. 22On 9 October 2003, there was a conference at Mr Symonds' office. I will deal later in these reasons with the conclusions in relation to that conference, but at least Tony Geagea attended that conference. Others attended. There is an issue in the proceedings as to whether David Geagea attended that conference. At the conference signatures purporting to be that of Tony Geagea and David Geagea were affixed to the loan documents, being the mortgage, loan agreement, direct debit request form, direction to pay, statutory declaration, borrowers' acknowledgment of legal advice and authority to date and pay advance. Mr Symonds also certified that he had given Tony Geagea and David Geagea legal advice. 23Mr Symonds' evidence was that he witnessed the signature of Tony Geagea and David Geagea and that he verified David Geagea's identity from his drivers' licence. Further, Mr Symonds testified that he also explained the contents of the documents to each of them and that he dated the documents before him that had already been signed by Charbel Geagea by inserting the date "15 September 2003", the date, according to Mr Symonds, that Tony Geagea told him that Charbel Geagea had signed the documents. 24It is appropriate at this stage to note that David Geagea denies attending a conference with Mr Symonds and also denies signing the documents or authorising anyone to sign on his behalf. David Geagea denies ever meeting Mr Symonds, denies signing documents in front of Mr Symonds and denies that Mr Symonds witnessed his signature. Further, David Geagea denies receiving advice from or communicating with Mr Symonds and having provided Mr Symonds with his drivers' licence. 25On 10 October 2003, Mr Symonds rang Galilee & Associates concerning a correction to the spelling of Tony Geagea's name on the documentation, or some of it. On the same date, he returned to Galilee & Associates the signed loan and mortgage documents under a covering letter. 26On 15 October 2003, Galilee & Associates received the loan documents for the first, second and third defendants from Mr Symonds and the covering letter of 10 October, to which reference is made above. The documents sent under cover of the letter on 10 October included: (i)A mortgage, memorandum 2584554, signed over a signature referrable to Tony Geagea, David Geagea and Charbel Geagea; (ii)Loan agreement with signatures attributable to each of the borrowers; (iii)Statutory Declaration relating to the change of name declaration, declared by Tony Geagea and witnessed by Mr Symonds; (iv)Direct Debit Request Form signed by the three borrowers; (v)Direction to Pay signed by the three borrowers; (vi)Statutory Declaration signed by Tony Geagea and David Geagea dated 9 October 2003; (vii)A Borrowers Acknowledgement by Charbel Geagea that he does not want legal advice, said to be dated 15 September 2003; (viii)A solicitor's certificate by Mr Symonds stating that he had advised Tony Geagea and David Geagea as to the loan agreement and mortgage prior to those documents being signed; (ix)An Authority to Date and Pay Advance apparently signed by the three borrowers; and (x)Certificates of insurance, rate notices and water rates notices for the Geagea Property and receipts for their payment. 27In the aforementioned description of the documents, the reference to signatures is a reference to that which purports to be a signature. As earlier stated, there is a significant issue as to the identity of the persons who signed the documentation, or, at least, the identity of the person who signed on behalf of David Geagea. 28On 15 October 2003, correspondence was exchanged between Mr Symonds and Galilee & Associates. That correspondence included a facsimile from Mr Symonds advising of the time booked for settlement; an advice from Galilee & Associates that settlement could not occur until it received a Declaration by Borrower and a Land Tax Clearance Certificate; a response from Mr Symonds enclosing a Borrower's Acknowledgement signed, subject to the foregoing qualification, by Tony Geagea and David Geagea purportedly on 9 October 2003; and a facsimile from Mr Symonds giving instructions as to the distribution of the loan funds. 29Also on 15 October 2003, each of Tony Geagea, David Geagea and Charbel Geagea purported to sign a Statutory Declaration witnessed by Kaissar Lichaajp; and Tony Geagea and David Geagea signed a Declaration by Borrower to the effect that they had received the independent legal advice to which reference has already been made. The Declaration by Borrower is signed, as a witness, by Mr Symonds. 30On 16 October 2003, Mr Symonds sent to Galilee & Associates a copy of the Declaration by Borrower to which reference is made in the immediately proceeding paragraph. 31On 16 October 2003, there was also an exchange of the usual documentation in relation to loans: being certification in relation to compliance with the Solicitors' Pack between Yes Home Loans and Permanent Custodians and AMS; land tax certificates; settlement notice from Yes Home Loans to AMS; and directions from AMS to Galilee & Associates confirming the transfer of the loan funds ($750,000.00). 32On 17 October 2003, the $750,000.00 received by Galilee & Associates into their trust account is disbursed in accordance with the directions of Mr Symonds, the bulk of which went to Provident Capital Limited by bank cheque. Mr Symonds had conveyed the instructions by letter/facsimile to which I will later refer. On the same day, Mr Symonds confirmed to Galilee & Associates that the matter had settled. 33On 20 October 2003, the settlement of the purchase of the Development Property occurs, which is confirmed by Mr Symonds to Tony Geagea. The mortgage to Permanent Custodians is registered on 1 November 2003, at which time a new Certificate of Title is issued. On 8 December 2003, Galilee & Associates confirmed to Permanent Custodians the registration of the relevant mortgage and sent them the relevant loan documents and an insurance policy with NRMA. The loan document included the Borrower's Acknowledgment by Charbel Geagea, the Solicitor's Certificate by Mr Symonds, a Statutory Declaration purportedly signed by Tony, David and Charbel Geagea on 15 October 2003, and a document entitled Terms and Conditions of Loan also purportedly signed by Tony, David and Charbel Geagea. 34By 29 September 2005, default had occurred in the loan agreement. Default notices were issued and on 29 December 2005 proceedings commenced.

Charbel Geagea 35As earlier stated, Charbel Geagea was in prison in Lebanon during all relevant steps in relation to the signing of documents and the authorisation of any action on his behalf. An affidavit of Charbel Geagea, sworn for purposes other than the final hearing of the proceedings, was before the Court and read without objection. Although, to be fair, the lack of objection was largely a result of the inconvenience associated with seeking to obtain Charbel Geagea for cross-examination and otherwise as a witness. 36No issue of credibility arises in relation to Charbel Geagea's evidence. Even without the affidavit (and the evidence of Tony Geagea, to which I will refer later in these reasons) the overwhelming inference is that Charbel Geagea was not consulted about the mortgage on the Geagea property and did not sign the documents that bear his signature. 37Some possibility exists that Charbel Geagea (if one disregards the evidence of Tony Geagea) may have given consent or authorisation to Tony Geagea to act as he did. Any such finding would depend significantly on inferences that were otherwise available. Notwithstanding that Permanent Custodians bears the onus of proof in relation to these matters, I would conclude, on the evidence before the Court, that Charbel Geagea did not sign any of the loan documents where a signature has been attributed to him and did not authorise Tony Geagea to act as he did in mortgaging the property.

Tony Geagea 38Tony Geagea was called to give evidence. He testified to the following propositions: he met with Mr Symonds and forged documents in front of Mr Symonds; David Geagea did not sign any documents in front of Mr Symonds; no one purporting to be David Geagea signed documents in front of Mr Symonds; Tony Geagea never authorised the conduct undertaken purportedly on his behalf; Tony Geagea forged the application for a loan before one or more persons at Yes Home Loans and forged those documents in the presence of the personnel at Yes Home Loans. 39It is unnecessary to detail the occasions, said by Tony Geagea, to be the times and dates upon which these forgeries occurred. The lack of necessity to detail these occasions is predicated on the fact that his evidence is not believed. Even where his evidence is otherwise not contradicted (for example where another person fails to recall) his evidence is not believed. The best example, raised by the Court during the course of submissions, is his evidence of a meeting with Mr Symonds prior to the hearings. Tony Geagea's evidence was that Mr Symonds was surprised or shocked at seeing David Geagea. This evidence was plainly given for the purpose of impressing the Court (and anyone else that was listening) as to the truth of that to which Tony Geagea was otherwise attesting. 40However, if, as was the evidence of Tony Geagea, Mr Symonds was party to the forgery and no one was seeking at the time to impersonate David Geagea for the purpose of signing documents, why, one must ask, would Mr Symonds be surprised on seeing David Geagea or the real David Geagea? 41On Tony Geagea's own evidence, he forged documents for his own business purposes and represented to others (leaving aside Mr Symonds for the time being) that the documents were genuine. He did so knowing that he was putting at risk his parents' home and committing a number of criminal offences. 42His evidence is worthless. I consider him, both in terms of the content of his evidence and his demeanour, to have been mendacious, dissembling, and deliberately untruthful. His evidence cannot be believed.

Phillip Symonds 43Mr Phillip Symonds gave evidence that he did not intend to represent that he was acting for Charbel Geagea or that Charbel Geagea was a client of Mr Symonds or his firm. The correspondence will speak for itself and will be dealt with later. He testifies to the fact that he was instructed by Tony Geagea, to a large extent, and that the occasions he has purported to have witnessed Tony Geagea's signature involved Tony Geagea signing the documents, which he has then witnessed. Tony Geagea's signing of documents occurred in Mr Symonds' presence. 44Largely, given the period of time since these events occurred, Mr Symonds had no or little independent recollection of the conferences or the signing of the documents. His evidence was based upon his notes, his practice and his attitude to the signing of a document as a witness in circumstances where he had not witnessed the signature. He instanced an occasion of a person whom he trusted who told him that his child had signed a document and asked Mr Symonds to witness it. Mr Symonds refused. He also gave an example of a close business associate (cotenant and accountant) who requested Mr Symonds to witness his mother's signature. Mr Symonds declined this request, to be informed later that the mother spoke no English and was unaware of the transaction. That was his practice without exception. I accept that evidence. 45Mr Symonds' demeanour was such that he gave no reason to disbelieve him. He is an officer of the court. The content of his evidence was such that he gave no reason to disbelieve his evidence. Even in circumstances where he could have easily given evidence, the effect of which would have been to exculpate him or his partners from liability, which evidence would have otherwise been uncontradicted, he declined so to do, where his memory was such that he could not independently recollect the events. I consider Mr Symonds to be a witness of truth.

David Geagea 46Permanent Custodians submits that on the issue of whether David Geagea attended the office of Mr Symonds, David Geagea should be believed and points to what it says is an inconsistency in the evidence of Mr Symonds. The inconsistency relates to the obtaining of identification. At one stage Mr Symonds gives evidence that if he were not requested by the mortgagee or lender to identify persons, he would not. Later, he said it was his usual practice to identify persons. 47In my view, the two statements are not inconsistent. One is a statement as to the usual practice when witnessing a document; the other is whether Mr Symonds is certifying to a lender or mortgagee whether the person who signed was in fact the person named in the document. 48Lastly, no inconsistency arises from the failure to obtain identification from Tony Geagea, given that Tony Geagea was a continuing client in relation to a number of loans for which drivers' licence identification would not be necessary. 49Because of Mr Symonds' lack of independent recollection after the time that has passed, David Geagea was not cross-examined on the basis that it was put to him that he signed the documents in question. David Geagea testified to the proposition that he did not sign the documents and was unaware of the actions of his brother, Tony Geagea, relevant to these events. 50There are a series of documents containing signatures referrable to the name David Geagea. No expert evidence relating to handwriting has been adduced. Not all of the signatures are, from the lay perspective of the Court, identical. Signatures are rarely identical. 51Nevertheless, it must be said that, again from a lay perspective, there are similarities in the handwriting in each of the documents with the handwriting and signatures of David Geagea that are undeniably his own. Mr Symonds testified that his invariable practice in witnessing a document was to obtain the drivers' licence of the person signing the document, and after checking that the person in the licence is the person who is signing the document, take a copy of the licence. 52In evidence before the Court, from the files of Mr Symonds, is a photocopy of the licence of David Geagea. David Geagea testifies that he never gave that licence to Mr Symonds, the inference that is sought to be conveyed is that Tony Geagea stole or borrowed the licence for the purpose of executing his forgery and fraudulent plans. 53The foregoing also goes to the credibility of Mr Symonds. If Mr Symonds were party to the fraud and knew that David Geagea was not signing the documents, why would he require or insist upon the drivers' licence? 54Moreover, if Mr Symonds were calculatingly requiring the provision of a drivers' licence for the purpose of hiding any fraud, such plan would seem to suggest that Mr Symonds would testify that David Geagea was at the conference, present and signed the documents. He did not so testify. Mr Symonds testified that he had no independent recollection of who was there, and could give evidence as to what occurred only on the basis on his universal practice, or notes of the event. 55David Geagea, at the time that the impugned events occurred, was just 18 years of age. He is now much older. On the basis of the evidence thus far discussed, and which I accept, there are two possibilities. Either someone who looks similar to David Geagea attended and signed the documents in front of Mr Symonds, or David Geagea attended and signed the documents. 56David Geagea's demeanour was not confidence-inducing. I have serious doubts as to the veracity of his evidence. It is for Permanent Custodians to satisfy the Court that David Geagea did not sign the documents. 57As earlier stated, no handwriting evidence was adduced. In the circumstances, I am not satisfied that David Geagea did not sign the documents in question, nor authorise the conduct of his older brother. 58If David Geagea were to have signed the documents, I have little doubt that he was induced so to do by his older brother, Tony Geagea, as a result believing that what he was doing was both lawful and the correct thing to do. However, I am unable to make a positive finding that he did sign the documents. Rather, I am unable to make a positive finding that he did not sign the documents, nor authorise the conduct. 59In oral evidence, David Geagea accepted that he told his own legal representatives that "most of the security and related documents were not executed by him". There is a significant difference between none of the documents being signed and most of the documents not being signed, which confirms the similarity observed, from a lay perspective, by the Court and, in part, is a factor in the Court's doubt as to David Geagea's credibility. 60As a consequence of the foregoing, to the extent that Permanent Custodians bears the onus to prove that David Geagea did not sign the documents and authorise the conduct, it has not satisfied the Court of those facts. At the same time, to the extent that Mr Symonds bears the onus of proof to show that David Geagea did sign the documents and authorise the conduct, he has not persuaded the Court of that situation.

Correspondence 61While Permanent Custodians relies upon the totality of the conduct of Mr Symonds, particular attention has been paid to the letters of 10 October 2003, 15 October 2003 and 17 October 2003. Permanent Custodians submits that these letters represent that Mr Symonds (and the partnership of which he was a member) acted for each of Tony Geagea, David Geagea and Charbel Geagea on the loan agreement and the mortgage; each of them wished to proceed with the loan agreement and mortgage; each of them had signed a mortgage and loan agreement; the law firm had authority from each of them to direct the disbursement of the monies available under the loan; and that the law firm (and in particular Mr Symonds) had given advice to Tony Geagea and David Geagea. 62It is those representations that give rise to the allegations of misleading or deceptive conduct; the conduct that is said to give rise to claims in negligence; and the conduct that is said to be a breach of warranty of authority. It is necessary to provide more detail of the terms of the representations. 63The context of the letter of 10 October 2003 was that on 3 October 2003 there was a conversation between Mr Symonds and an officer of Galilee & Associates on behalf, relevantly, of the plaintiff, to the effect that Mr Symonds was acting in the matter. Arising from that conversation, on 7 October 2003, Galilee & Associates sent to Mr Symonds the loan, mortgage and associated documents that had initially been sent to Tony, David and Charbel Geagea at the address in Earlwood. 64The covering letter from Galilee & Associates dated 7 October 2003 referred to the mortgage to Permanent Custodians by Tony Geagea, David Geagea and Charbel Geagea; listed the enclosed documents (reference to which has already been made); stated the requirement for stamping of the Loan Agreement and the mortgage; requested the Declaration of Borrower to be executed in the presence of JP, or solicitor if legal advice were to have been obtained; and requested that the Direction to Pay be completed, signed and returned. 65That letter, dated 7 October 2003, apparently arrived at the office of Mr Symonds on 9 October 2003. On the same date, Mr Symonds wrote to Tony Geagea informing him of the receipt of the documentation and the necessity to arrange for David and Charbel Geagea to attend and sign the documentation and for him (i.e. Tony Geagea) to attend and sign the documentation. 66Mr Symonds in evidence (Transcript 321) expressed the view that he expected to witness the signatures of Tony Geagea, Charbel Geagea and David Geagea and thereafter to return the documents to Galilee & Associates. This evidence is derived from terms of the letter. I have already referred to the fact that Tony Geagea attended Mr Symonds' office and signed documents, witnessed by Mr Symonds. I have already discussed the evidence of David Geagea as to his attendance at the office. 67On 10 October 2003, Mr Symonds sent a letter to Galilee & Associates, as stated above, in the following terms: "Dear Sirs, RE: PERMANENT CUSTODIANS LIMITED MORTGAGE TO TONY GEAGEA AND CHARBEL GEAGEA AND DAVID GEAGEA PROPERTY - xxx xxx ROAD, EARLWOOD Enclosed is:- 1. Mortgage. 2. Loan Agreement. 3. Terms and Conditions. 4. Change of Name. 5. Direct Debt Request Form. 6. Direction to Pay. 7. Statutory Declaration of Tony Geagea and David Geagea. 8. Statutory Declaration of Charbel Geagea. 9. Acknowledgement of Charbel Geagea. 10. Solicitors Certificate in respect of Tony Geagea and David Geagea. 11. Authority to date and Pay advance. 12. Section 47 Certificate. 13. Insurance Policy. 14. Current rate notice. 15. Current water notice. Could you please arrange for the stamping of the loan documents utilising proceeds from the loan advance. Please deduct your costs and disbursements from the loan proceeds. We will keep you advised. Yours faithfully." 68On 15 October 2003 at 1.17pm, Mr Symonds sent a fax to Galilee & Associates essentially in or to the same effect as to the letter of 10 October 2003, stating that the documents had been forwarded by urgent courier at 12 noon that day (15 October 2003). It also informed Galilee & Associates of the time and date booked for the settlement of the purchase. 69At 4.53pm on 15 October 2003, Galilee & Associates replied to the earlier facsimile. Galilee stated that it was not in a position to settle until it had received a Declaration by Borrower (by Tony Geagea and David Geagea) and a clear land tax certificate. Such documents would need to be received by 9am the next day (16 October 2003) and the letter also requested directions as to the payment of the available funds no later than 12 noon two days prior to settlement. 70On 15 October 2003, Mr Symonds sent a facsimile to Galilee & Associates. The header was the same as in the letter of 10 October 2003. The relevant substance of the facsimile was: "You are directed to pay the loan advance of $750,000.00 as follows: Valuation fee $725.00 Galilee costs and disbursements $3,348.50 Stamping fee $33.00 Provident Capital Limited $745,893.50." 71On 15 October 2003, Mr Symonds witnessed signatures that are said to be the signatures of Tony Geagea and David Geagea on the Declaration by Borrower. As is clear from its terms, the Declaration by Borrower was a declaration that they had received legal advice on the loan and mortgage. 72On 16 October 2003, Mr Symonds sent the Declaration by Borrower and the certificate relating to clear land tax to Galilee & Associates. On the same day, Galilee & Associates sent a fax to Yes Home Loans to the effect that the mortgage and loan were ready for settlement and seeking urgent advice that all was in order for the settlement on 17 October 2003. 73On 17 October 2003, Mr Symonds (or someone on his behalf) attended a conference and settled the loan and handed to Provident Capital Limited a cheque in the amount of $745,893.50. 74On 17 October 2003 at 5.12pm, Mr Symonds sent a facsimile to Galilee & Associates, again with the same header as the earlier correspondence, stating: "The matter settled! Thank you very much for your patience." 75On 20 October 2003, the purchase of the Development Property occurred, with Raytoni as the purchaser, the settlement monies derived from four loans, including the loan from Permanent Custodians for $750,000.00. The source of the other monies is not currently relevant. 76Essentially, Permanent Custodians argues that the combination of the telephone conversations representing that Mr Symonds was acting in the matter, the inclusion of all three mortgagors in the header on the correspondence and the terms of the correspondence constituted a representation by Mr Symonds that he was acting for each of the mortgagors. 77The header, of itself, would not give rise to any such representation. The header merely identified the subject matter of the correspondence, being the mortgage and loan between Permanent Custodians, on the one hand, and, on the other hand, each of the three mortgagors. Nevertheless, Mr Symonds, by the direction to disburse funds in a particular manner, represented that he had authority from the mortgagors (as a whole) to disburse funds in the manner identified. Did he have that authority?

Breach of Warranty of Authority 78In BHPB Freight Pty Ltd v Cosco Oceania Chartering Pty Ltd (No 3) [2009] FCA 1087 at [40], Finkelstein J said: "[40] The cause of action most beneficial to BHPB, and the one it presses first, is breach of warranty of authority. The cases establish that where a person (the first person) falsely represents that he has authority to act on behalf of another person in a particular transaction and the person to whom the representation is made (the second person) is induced to act on the faith of the representation and suffers loss, the second person may recover the amount of the loss from the first person in an action for breach of a collateral contract. It matters not that the first person acted in good faith, believing he had the authority which he purported to have. See generally Bowstead and Reynolds on Agency (18th ed 2006) 541; Chitty on Contracts, (30th ed, 2008) vol 2 65; Dal Pont, The Law of Agency (2nd ed 2008) 697; Collen v Wright (1857) 8 E & B 647. The action is based on collateral contract: Penn v Bristol & West Building Society [1997] 1 WLR 1356." 79The foregoing is accepted as the principle upon which this cause of action is based. The reference by Finkelstein J to Bowstead and Reynolds on Agency (18th Edition, 2006) at [541] should be expanded. Bowstead quotes the following passage from the judgment Lord Esher MR in Firbank's Executors v Humphreys (1886) 18 QBD 54 at [60], in which the Master of the Rolls said: "[60] The rule to be deduced is, that where a person by asserting that he has the authority of the principal induces another person to enter into any transaction which he would not have entered into but for that assertion, and that assertion turns out to be untrue, to the injury of the person to whom it is made, it must be taken that the person making it undertook it was true, and he is liable personally for the damage that has occurred." 80The learned authors in Bowstead go on to state: "Where a person, by words or conduct, represents that he has actual authority to act on behalf of another, and a third party is induced by such representation to act in a manner in which he would not have acted if such representation had not been made, the first-mentioned person is deemed to warrant that the representation is true, and is liable for any lose caused to such third party by a breach of that implied warranty, even if he acted in good faith, under a mistaken belief that he had such authority." 81That has been the approach taken to solicitors, acting in a belief that they had authority and in good faith, in circumstances where one party to a mortgage has given that authority but another party has not: see Penn v Bristol & West Building Society [1997] 1 WLR 1356, also cited by Finkelstein J in BHPB, supra. Relevantly for the current proceedings, Waller LJ in Penn, above, at [1364], said: "[1364] The promise, which on the above analysis was made, was that [the solicitor] had the authority of [the second party to the mortgage] to negotiate and complete the transaction on her behalf. It was that warranty that was broken. If [the solicitor] had actually obtained [her] instructions, either the transaction would never have gone as far as completion, and Bristol & West would not have advanced any money or (and this is not very likely) the transaction would have been completed without forged signatures and they would have had security for their loan." 82In the current scenario, it matters not whether David Geagea was in attendance at the office of Mr Symonds. Charbel Geagea definitely was not. It may be that Mr Symonds had good reason, being the representation by Tony Geagea, to act on the basis that Tony Geagea had the authority of Charbel Geagea (and, if he were not in attendance, David Geagea) to disburse the funds as Mr Symonds directed. 83The aforementioned good reason, if it were to exist, merely makes the direction by Mr Symonds to be one that is done "in good faith, believing he had the authority which he purported to have" (see BHPB, supra). 84As earlier stated, the header on the letters would not, of itself, be a representation that the author of the letters was acting for each of the mortgagors. Nevertheless, when combined with a direction as to the disbursement of the funds, it must either expressly or impliedly be a representation that the three mortgagors had authorised the disbursement as suggested. Given that the three mortgagors had not authorised the disbursement, there is a breach, by Mr Symonds, of the warranty of authority he represented that he possessed. 85It is necessary for the Court to determine whether that warranty occasioned the loss by Permanent Custodians. That issue will be determined later in these reasons. 86In essence, Permanent Custodians submits that there are two aspects of the conduct of Mr Symonds, which breaches his warranty of authority. The first of them is the transmission of documents on behalf of each of the three mortgagors. The second aspect is the authority to direct disbursement. 87I have already dealt with the authority to direct disbursement. As such, and given the nature of the finding, it is strictly unnecessary for me to deal with whether there is any other beach of the warranty, although it may affect the causation and loss. Nevertheless, it seems to me that the transmission of documents that, on their face, were not documents executed by a solicitor, including the witnessing thereof, would not, without more, be a representation as to the representation of the person to whom they relate, assuming, as one must in the foregoing, that there is a valid or legitimate reason for the transmission of the documents other than the representation of that person. 88In the present circumstances, there can be little doubt that Mr Symonds represented that he acted (and did act) on the authority of Tony Geagea. Mr Symonds, on my findings in good faith, acted on the understanding that he represented David Geagea. He did so either because David Geagea attended his office and gave that authority or because someone purporting to be David Geagea, and looking sufficiently similar to pass a test based on the photograph in David Geagea's licence, authorised that conduct. Further, he acted in relation to the disbursements, in good faith, on the basis that Tony Geagea and (possibly David Geagea) represented that Charbel Geagea authorised this conduct. 89Each of the documents executed by Charbel Geagea were, in that respect, unaffected by any conduct of Mr Symonds. Some of the documents obviously bore different witnesses and different dates than the documents completed by Mr Symonds. Therefore there was, it seems, good reason to forward the documents, even though each of the mortgagors may not have been represented by Mr Symonds. 90As earlier stated, it is unnecessary to conclude, finally, whether the authority to act was breached by the transmission of documents on behalf of each of the mortgagors. However, it would be, at least, extremely prudent, where a solicitor is acting for two of three mortgagors to clarify to a recipient of correspondence that those circumstances pertain. 91On one view, the implication arising from the declaration by Charbel Geagea that he did not obtain and did not desire legal advice suggests that Mr Symonds was not representing him at that time. Nevertheless, it would still be prudent for Mr Symonds to have made that disclosure expressly. 92As I have found that Mr Symonds at no stage acted for Charbel Geagea, it is unnecessary for the Court to discuss whether Mr Symonds would have, without further express authority, had the implied authority to complete the transactions in a manner consistent with the instructions already received: see Commonwealth Bank of Australia v Hamilton [2012] NSWSC 242 at [279] and [283].

Misleading or Deceptive Conduct 93The letter authorising disbursement of the funds in accordance with a manner in which they were disbursed was a letter, which represented that Mr Symonds was authorised by Charbel Geagea to authorise the disbursement in that manner. At the time, whether or not there was good reason for Mr Symonds to believe that Charbel Geagea authorised the disbursement in that manner, the direction to disburse and the representation that Charbel Geagea authorised the disbursement was misleading or deceptive. 94In Kahn as Trustee for the Khan Family Trust v Hadid [2008] NSWSC 119, I discuss, at length, the circumstances of a solicitor representing that he or she was acting on behalf of a borrower when, in fact, the solicitor was not so acting. As is clear from the authorities, and as discussed in Khan v Hadid, honest belief and lack of negligence do not necessarily avoid misleading or deceptive conduct. 95Further, a solicitor, in dealing with another solicitor, is entitled to rely on the fundamental proposition that the other solicitor, if the solicitor purports to act on behalf of someone, has obtained authority so to act and instructions to do as the solicitor purports to do. In Khan v Hadid, I said: "[160] Further the evidence clearly establishes that Mrs Khan, through her agents, relied upon the representations made by Mr Hancock. They were entitled to rely upon them. When a solicitor with a practising certificate represents to another solicitor (or person familiar with the processes) that he is acting on behalf of persons in a mortgage transaction, the other solicitor is entitled to rely upon those representations and rely upon the fundamental proposition that the solicitor purporting to act has obtained instructions to act. While the evidence of both Mr Theos and Mr Littleford was to the effect that they did rely upon Mr Hancock's representation and the fact that he was acting, it would defy common sense if it were otherwise." 96The difficulty, often, is whether the solicitor that is so acting is acting in trade and commerce. Often that will depend upon the circumstances surrounding the loan. In Khan v Hadid, the loan was for business purposes. Likewise, here, the loan is for business purposes. Ultimately, that may or may not make a difference to the question of whether the solicitor witnessing documents or instructing as to the disbursements of monies in a mortgage situation is acting "in trade or commerce". It matters not. Here the loan is for business purposes and the circumstances of the conduct of the solicitor is one in which the solicitor is acting "in trade or commerce".

Negligence 97The claim in negligence is governed by the Civil Liability Act 2002. Fundamental to the issues in this case is whether there is a duty of care owed by a solicitor for a party to a transaction to the other party to the transaction. Strictly, it is unnecessary to decide this issue, due to the findings otherwise made in terms of breach of warranty of authority and misleading or deceptive conduct. 98As Gleeson CJ said in Modbury Triangle Shopping Centre Pty Ltd v Anzil [2000] HCA 61; (2000) 205 CLR 254, at [13]: "[13] Most actions in tort which come before trial courts arise out of relationships in which the existence of a duty of care is well established, and the nature of the duty well understood. Cases arising out of the use of a motor vehicle, or involving employer and employee, or bailor and bailee, turn upon the application to the facts of well settled principles concerning legal responsibility. References to duty of care, breach of duty, and causation provide convenient sub-headings for a judgment, but in many cases the concepts require no further analysis. In other cases, of which the present is an example, there is a real issue as to the scope of legal responsibility. Such an issue cannot then be resolved by a detailed recitation of the facts, the repetition of the standard rubrics under which discussion of the tort of negligence is commonly organised, and an appeal to common sense. I do not suggest that is what occurred in the present case. The learned judges identified and addressed the problem that arose, although, as will appear, I disagree with the conclusion they reached. A recitation of facts may not be useful unless it distinguishes between facts essential to the cause of action, particulars, and evidence. Modern pleadings take a form which often blurs such distinctions. The rubrics under which issues are organised for discussion may do little to assist the resolution of those issues. Common sense is important, but it is not a substitute for legal analysis when that is required." 99In Modbury, Hayne J, referring to the comment of Dixon CJ in Chapman v Hearse [1961] HCA 46; (1961) 106 CLR 112 at [115], remarked that every damage caused by another is foreseeable, at least to persons of sufficient imagination and intelligence. "Foresight of harm is not sufficient to show that a duty of care exists" (Modbury at [99], per Hayne J). 100It would be an extraordinary proposition that a solicitor for a party in a transaction owed a duty of care to the other party in the transaction that supplanted the duty of care owed to the Court or his own client. A solicitor acting for one party does not ordinarily owe a duty to another party, unless some responsibility or duty has been assumed by that solicitor: Bebonis & Another v Angelos & Others (2003) 56 NSWLR 127 at [134]-[135] (per Handley JA, with whom Beazley and Heydon JJA, as their Honours then were, agreed). 101Even though there may not ordinarily be a duty of care between a solicitor for one party to another party, there may be a duty of care associated with such a relationship if the only scope of that duty is not to mislead or, even in a more limited way, not to mislead deliberately. As earlier stated, it is unnecessary to determine the issue of whether a duty of care arises or whether the scope of the duty of care extends to the conduct of Mr Symonds. On the other bases of the cause of action, a liability arises. No greater damage could be awarded on the basis of a successful claim in negligence than is otherwise able to be determined and, therefore, it is unnecessary to determine this basis for the cause of action.

Causation 102Of the two causes of action that have been determined finally, neither claims damages for harm resulting from negligence, as a consequence of which the provisions of Part 1 of the Civil Liability Act 2002 do not apply. Likewise Part 4 does not apply because the causes of action do not arise from a failure to take reasonable care, nor under the New South Wales equivalence of the Australian Consumer Law. 103In relation to the claim under the Australian Consumer Law, similar issues as to apportionment arise: see Part VIA of the Competition and Consumer Act 2010. 104Nevertheless, the fundamental issue to be determined is whether the representation that Mr Symonds was acting for Charbel Geagea and authorised to direct the disbursements was conduct upon which Permanent Custodians relied or was it a representation, which made little or no difference to the conduct of Permanent Custodians. 105It was impermissible for Permanent Custodians to rely upon the representation by Yes Home Loans that Mr Symonds was acting on behalf of all and each of the mortgagors in determining that Mr Symonds in fact acted in that way. Nevertheless, assuming, as I must, that competent persons receiving the documents from Mr Symonds would have noted that the witnessing and dating of the signatures of Charbel Geagea were always different from the dating and witnessing of the documents from Tony and David Geagea and also would have noted that only Charbel Geagea had foregone legal advice, the representation as to disbursement must be seen in all other contexts. 106Assuming, as I do, that Permanent Custodians (or its agent) acting competently would have taken the view that Mr Symonds did not act for Charbel Geagea, or at least that there was a serious question as to its acting in that regard, it also would have noted that two of the three mortgagors were represented by Mr Symonds and he was conducting the procedural matters on behalf of the mortgagors, as a group. 107The fact, if it be the fact, damage would have occurred if Mr Symonds had not represented that the mortgagors (all of them and each of them) authorised the disbursements of funds in a particular way is not to the point. Mr Symonds submits that if Mr Symonds had not sent the direction to disburse letter of 15 October 2003, Permanent Custodians would have corresponded with the three mortgagors at the address in Earlwood. The proposition that the letter would have been intercepted by Tony Geagea; the signatures forged; and damage would have been caused; does not detract from the proposition that the letter of 15 October 2003 was sent by Mr Symonds and caused Permanent Custodians to disburse the funds in accordance with the directions provided in that letter. 108The fact that, in the absence of conduct by a defendant, damage would have been caused by another person acting unlawfully does not negate the proposition that the damage was caused by the defendant's conduct. In Adeels Palace Pty Ltd v Moubarak [2009] HCA 48; (2009) 239 CLR 420, the High Court discussed causation and breach of duty (albeit in the context of the Civil Liability Act) and referred to steps to be taken that may have prevented this injury but simply caused an injury to another (see Adeels Palace at [50]). The converse is also true. The fact, if it be the fact, that if the conduct by Mr Symonds did not occur, then other steps would have been taken by Permanent Custodians that, in all probability, would have led to different criminal or tortious acts for which a cause of action may arise does not mean that the conduct of Mr Symonds has not caused the disbursement of the funds and thereby the losses that can properly be calculated. 109Moreover, in the context of Mr Symonds acting as the conduit for all of the documents, on behalf of each of the mortgagors, a letter instructing Permanent Custodians as to the disbursements would, reasonably and properly, be taken as a representation that Mr Symonds had authority to instruct as to the disbursement of the funds on behalf of each of the mortgagors. 110It was on the basis of that instruction that Permanent Custodians acted and it was that instruction and the conduct in reliance thereon that caused the loss and damage.

Proportionate Liability 111I have concluded that the fourth, fifth and sixth defendants are liable for breach of warranty of authority. For such a claim or cause of action, the liability of another does not ordinarily reduce damages. 112However, the Court has also determined that liability of the fourth to sixth defendants arises under the Australian Consumer Law for which proportionate liability does arise. Yes Home Loans have been significantly responsible for the damage that has been determined as arising from any or all of the fourth to sixth defendants: (see Podrebersek v Australian Iron & Steel Pty Ltd [1985] HCA 34; (1985) 59 ALJR 492). 113No party suggests that Yes Home Loans were the agent of Permanent Custodians. Nevertheless, as arises from the affidavit of Alan Laubhan of 18 March 2009, at [7], and a comparison with the other evidence, a number of essential steps necessary to protect Permanent Custodians were not undertaken. In particular, no or insufficient steps were taken to identify each mortgagor [see affidavit at paragraphs 7(a)(i), 7(b) and 7(d)]. It was Yes Home Loans that expressly stated that Mr Symonds represented each of the mortgagors. 114No party has addressed on how, if at all, I should take account of that wrongdoing, where both causes of action succeed. Further, no party has addressed on how, if at all, I take account of the wrongful tortious (and criminal) behaviour of Tony Geagea. Nor have the parties addressed on the effect of the settlement with the first, second and third defendants. 115If the only proportionate reduction in damages were that of Yes Home Loans, I would determine, applying Podrebersek, that Yes Home Loans were responsible for 33 1/3% of the damage. I do not accept, consistent with earlier findings, the evidence of Tony Geagea as to the involvement of Yes Home Loans in the forgeries. 116The fourth to sixth defendants are granted leave to address on the effect of the foregoing on the level of damages overall and on the cross-claim.

Conclusion 117The Court makes the following orders and directions: (1)Judgment for the plaintiff against the fourth, fifth and sixth defendants; (2)The fourth, fifth and sixth defendants shall pay the plaintiff's costs of and incidental to these proceedings; (3)Leave is granted to the fourth, fifth and sixth defendants to address in writing, within twenty-one (21) days of the date hereof, the issues of the effect of proportionate liability finding on the amount of the damages to be awarded and on any damages or contribution under the cross-claim; (4)Each of the plaintiff and the fourth, fifth and sixth defendants have leave to apply in writing for any special or different order as to costs within twenty one (21) days hereof. Any other party affected by any such application may respond within twenty-one (21) days of receipt of the application. Any such application and response shall enclose, or be made by, a submission of no more than three (3) pages and shall enclose any relevant documents.

Amendments 05 July 2016 - 1. [Cover Sheet] Parties to the proceedings amended. 2. [1] Parties to the proceedings amended. 3. [15] Date amended. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 05 July 2016